With the market’s recent ardour for listings cooled by a string of disappointing deals, owners who want to sell companies are leaning more towards sales to trade buyers rather than initial public offerings.

While many were already hedging their bets by looking for a trade buyer while continuing preparations for an IPO, the number adopting that dual track approach is growing.

Company owners – often private equity firms wanting to exit an investment – had been queuing to float their companies since the IPO market came to life last Autumn. In recent weeks, however, preparations for a string of high-profile IPOs have been ended by trade sales, including UK retailer House of Fraser and French mobile phone unit SFR.

Gordon Milne, partner at Allen & Overy, said: “People are becoming slightly unsettled by the IPO market.
Depending on where they are at in the process they will say ‘Rather than spend all that time and money on that process maybe we should just look at a trade sale?’.”

Recent disappointments include Brit Insurance and Pets at Home, in a market hit by the end of the love affair with technology stocks, fears about Ukraine, and lacklustre earnings.

Marco De Benedetti, co-head of Europe at private equity house Carlyle Group, said a company’s post-IPO performance was important to private equity firms, which often retain a stake with the intention of selling it later.

He said: “Dual track processes can take six months and during that period the market can change significantly. It’s an insurance policy. We try not to play around with the market – we have too much respect for the financial community. If we say we want to list, we will list.”

Vivendi’s mobile phone unit SFR in France, which one banker on the deal said was being prepared for a €12 billion IPO, was instead sold to Altice. House of Fraser, considered for an IPO, was sold to a Chinese buyer.

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Adam Gishen, head of equity advisory at adviser Ondra Partners, said: “It’s too early to tell whether there’s a structural shift back to M&A. But tactically a dual track looks more appealing for a seller at this point in time, because it gives them optionality until they have to make a decision.”

But not all IPOs are off.

Gareth McCartney, head of equity syndicate for Europe, the Middle East and Africa at UBS, said: “In the current environment, IPOs are a very credible option for vendors. I don’t think they’ve become less attractive because a couple of deals have underperformed.”